This week Montana State Auditor John Morrison issued a Cease and Desist Order (May 8) against Tennessee based oil and gas development company, Mid-America Energy. Along with ordering Mid-America Energy, Inc. and its officers to stop violating the Montana Securities Act , the State Auditor’s Office alleges Mid-America Energy violated anti-fraud and registration provisions of the Montana Securities Act. A Missoula couple invested approximately $120,000 with this company at the urging of the company’s sales representative, Sy Schaiken. Mid-America’s president, Gary Milby and the operations manager, Clinton Goff are also named as respondents.

"The sale of fraudulent oil and gas investments is a recurring problem that gets worse when energy prices are high," said Morrison. “High oil prices have created a heightened interest in investment in energy related business ventures. Whenever economic circumstances create an opportunity for money to be made legitimately, scamsters follow in the shadows to take advantage of the situation.”

The securities involved are shares of the production payments from oil wells allegedly located in Kentucky. The Securities Department alleges the company and its agents acted fraudulently by promising incredible returns, including a 100% return on investments in 12 months and dividend checks of $3,600 each month. The Montana investors have received nothing for their investment and have been unable to make contact with the company since January of this year. These securities have not been properly registered in Montana and neither the company nor any of its employees are authorized to sell securities in Montana.

Several other states have taken action against Mid-America, Milby, Goff and Schaiken for securities violations similar to those alleged by Montana’s Securities Department, including California, Arizona, Alabama, and Pennsylvania.

Mr. Milby had a 16th birthday party for his daughter in October of 2006 that has been well publicized, including a feature on MTV’s “My Super Sweet 16” television show. Milby reportedly spent over $100,000 on the party and then bought his 16 year old daughter a BMW as a birthday gift.

“Part of the mission of our office is to foster capital formation in Montana and help legitimate businesses comply with Montana law when raising money,” said Morrison. “We are also entrusted with the responsibility of protecting Montana investors from becoming fraud victims.”

Scam artists tend to stay away from the “knowledgeable” investor when they are trying to swindle their victims. They also will stay away from advertising, as they are aware that would invite the attention of the Montana Securities Commissioner. They tend to target individual victims and make an unsolicited contact, usually with a phone call, offering a ‘great’ business opportunity.

Morrison said that most oil and gas fraud victims don’t realize they have been scammed until after the money is gone. “As with any investment, we ask that Montanans investigate before they invest and call my office.”

The Montana State Auditor’s Office can be reached at 1-800-332-6148 or in Helena at 444-2040.